Strikes and Political Activism of Trade Unions: Theory and Application to Bangladesh

Abstract

:The behavior of Bangladeshi trade unions is characterized by political activism, and momentous strikes, called hartals there, have played a crucial part in most political changes in this country. We offer a theoretical framework for discussing this fact, and we test empirically its main prediction by bringing out the political cycle that characterizes the occurrence of strikes in Bangladesh.Acknowledgements : This paper owes much to many people met in Bangladesh during our numerous visits there, whom we wish to thank collectively. We thank also Francesco Goletti for providing some of the data used, without implicating. Helpful comments by an anonymous referee are gratefully acknowledged, without implicating.

Strikes are more common in countries with majoritarian electoral systems

“…However, they do have unilateral control over hiring decisions. 7 In addition to this standard model, I follow Azam and Salmon's (2004) in awarding the union the power to call strikes. The union seeks to maximize the total utility of its membership and its objective function is taken to be max (w,s)∈ 2…”

“…Work in this tradition, as Skocpol and Amenta write, links "programmatic innovations or increases in public social expenditure in many capitalist democratic nations to measures of industrial strike militancy and other kinds of "extra-institutional" popular action outside of orthodox economic or political routines" (1986,139). Recently, Azam and Salmon's (2004) have proposed a formal model which incorporates this idea: Unions strike in order to induce the government to increase its efforts at job creation. My model is similar to theirs but, unlike them, I focus on how the incentives for governments to pursue an accommodationist policy vis-à-vis labor unions differ across countries with different types of electoral system.…”

Government Fiscal Efforts vs. Labour Union Strikes. Strategic Substitutes or Complements?

“…Following a similar approach, Vernby (2007) develops a policy-game where a union has the power to call strikes in order to entice the government to increase its job creation efforts. Contrary to Azam & Salmon (2004), he focuses on how the incentive for the government to pursue an accommodationist policy depends on the type of electoral system. The studies of Azam & Salmon (2004) and Vernby (2007), nevertheless, lack a symmetric game structure and no strategic interaction is explicitly considered in their econometric strategy.…”

“…These macroeconomic policygame models are typically partial equilibrium models based on a sequential set of players' decisions, in which the union moves first and sets wages unilaterally, then the government selects public expenditure and, finally, firms make their hiring decisions (Azam & Salmon 2004, Vernby 2007. Within this framework, workers may try to influence government policy through strikes.…”

“…Within this framework, workers may try to influence government policy through strikes. For instance, Azam & Salmon (2004) apply an imperfect information framework in a policy-game between union and government where the government cannot credibly commit to a given level of employment-generating public expenditure and the union may use strikes to force the government to increase the same public expenditures. Following a similar approach, Vernby (2007) develops a policy-game where a union has the power to call strikes in order to entice the government to increase its job creation efforts.…”